At this time when the debt to Gross Domestic Product (GDP) ratio is high, the government of Sierra Leone has made domestic revenue mobilization a priority through key policy reforms, including measures to strengthen the country’s tax administration. Despite some progress, challenges remain and the government, United Nations Development Programme(UNDP), and other development partners are deeply committed to addressing them.
Inflation remains high (42.71% in February 2023) in the midst of reduced economic growth, rapidly depreciating domestic currency, and high energy prices, which further threaten progress in SDGs implementation. The COVID-19 shock disrupted the fiscal consolidation momentum of previous years and the economic situation has been further worsened by the supply chain disruptions caused by the Ukraine-Russia crisis.
UNDP is focusing on tax compliance and revenue generation through the Integrated National Financing Framework (INFF) and the Joint SDG Fund and is supporting the National Revenue Authority (NRA) and the Fiscal Decentralization Unit of the Ministry of Finance to strengthen public financial management and enhance tax compliance and revenue mobilization by
public-private dialogue with businesses in the informal sector on the importance of the current tax reforms, compliance, and advantages of business formalization across the country
operational support to the pilot Block Management System, a neighbourhood tax administration block office in the Western rural district area of Waterloo, and
hands-on training in revenue and expenditure forecasting, collection strategies, and reporting for hundreds of fiduciary staff of local councils.
Several INFF-related initiatives supported by UNDP are being implemented to operationalize the recommendations from the Development Finance Assessment (DFA) with a particular focus on domestic revenue mobilization in the context of implementing the SDGs.
A Block Management System (BMS) has been piloted in Waterloo and funded through the Joint SDG Fund Project to facilitate the effective tax administration for businesses operating in that part of the country and support Government efforts to bring the tax services closer to the taxpayers, especially Micro, Small, and Medium Enterprises.
As a result of the establishment of the BMS in Waterloo, taxpayers are now able to register for taxes, pay taxes, and seek, or get any general information on taxes, their rights, and obligations.
Since its establishment, the Waterloo Block office has made some gains. A Total of 1,131 potential taxpayers were covered and 157 informal businesses were integrated into the tax base through the pilot Waterloo BMS, 28 were run by females. The Waterloo BMS collected SLL 5,361,054.50 million Sierra Leonean Leones in 2022 and a further SLL 1,678,098.24 Sierra Leonean Leones in 2023 (NRA, 2023).
“The major goal for the implementation of the BMS was to enhance tax compliance and increase revenue generation,” said Sulaiman Tejan Jalloh, from the National Revenue Authority.
According to the Head of UNDP’s Strategic Advisory Unit, Dr Ligane Sene, the progress is encouraging but there is a need to consolidate the gains. Speaking at a familiarization visit to the Waterloo BMS, Dr. Sene said,
“BMS could be a strong tool to collect more revenue for national development by bringing informal businesses into the tax net, simplifying the tax process, and improving the effectiveness of tax collection and reducing transaction cost. For that to happen quickly, there is a need to consolidate achievement and continue the rollout of BMS to enhance tax compliance and increase resource mobilization for national development priorities.”
UNDP is also providing operational support to the NRA to roll out additional fabricated container BMS offices at various locations in the Western area (Jui, Wellington, Model, Hill Station, etc.).
The UN Joint SDG Fund is a multi-partner trust fund established by the United Nations General Assembly and supported by Sweden, Spain, the European Union, Netherlands, Norway, Switzerland, Germany, Denmark, Ireland, Luxembourg, the Republic of Korea, Monaco, Portugal, Italy.
Originally published in UNDP Sierra Leone